Subsidizing or taxing education? A note on the quality gap and government finances

Daniel Flores

Estudios Económicos, 2016, vol. 31, issue 2, 339-353

Abstract: In this article, I study the effects of an education tax (or subsidy) on the quality gap between public and private education as well as on government finances. In order to do this, I model the behavior of a private school that chooses price and quality in order to compete for students with a public school. Among other things, I show that a per unit tax (or subsidy) can increase (reduce) the quality gap and worsen (improve) government finances.

Keywords: education; quality; taxes; subsidies (search for similar items in EconPapers)
JEL-codes: H2 I21 I22 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:emx:esteco:v:31:y:2016:i:1:p:339-353

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